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Public Notice CRTC 1995-48

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Archived

Public Notice

Ottawa, 24 March 1995

Public Notice CRTC 1995-48

INTRODUCTION TO DECISIONS RENEWING THE LICENCES OF PRIVATELY-OWNED ENGLISH-LANGUAGE TELEVISION STATIONS

I INTRODUCTION

During the fall of 1994, the Commission held public hearings in Toronto, Montréal and Vancouver to consider applications for the licence renewal of private English-language television stations in those cities as well as in other communities, primarily in Southern Ontario and in the Central Interior of British Columbia. Applications for the renewal of the licences of nine originating television stations were considered as appearing items at the hearings. A total of 13 other renewal applications were considered as non-appearing items.

The Commission also considered the renewal applications of CBC owned- and-operated stations at these hearings. Issues related to these CBC stations will be addressed in their respective renewal decisions. The present notice addresses only the licence renewals of private English-language commercial television stations.

The applicants for licence renewal at the public hearings in Toronto, Montréal and Vancouver last appeared before the Commission in the late 1980s. Since that time, significant changes in the Canadian broadcasting environment have affected the way in which conventional broadcasters serve their local audiences and contribute overall to the Canadian broadcasting system.

Notably, the increase over the last seven years in the number of new Canadian specialty services and of available foreign services has resulted in increased audience and revenue fragmentation.

Many of the private television licensees whose renewal applications were heard in the fall of 1994 will receive seven-year licence terms and thus will not appear before the Commission again for licence renewal until into the next century. The Commission recognizes that the stations entering this new term are faced with a number of uncertainties about the future. This point was emphasized by the Canadian Association of Broadcasters (CAB) in its written intervention to the applications heard at the Toronto hearing. According to the CAB, local broadcasters will be challenged by a more competitive marketplace as more services are either authorized for distribution or are licensed, and as Canadians gain access to emerging distribution alternatives to cable, such as direct-to-home satellite. The CAB proposed that:

In these licence renewal hearings [the CRTC] must recognize that the market circumstances stations operate under will continue to change over the next licence term and it must ensure that stations have flexibility in how they respond to those changing circumstances.

The Commission agrees that the viability of local broadcasters will depend upon their ability to adapt to the challenges of the changing marketplace. It has been expressly for the purpose of providing broadcasters greater flexibility that the Commission has implemented a number of regulatory and policy changes in recent years.

Firstly, in Public Notice CRTC 1991-22, the Commission announced its "Policy for Local Television Programming". This policy, while reaffirming the importance of the principle of local reflection, removed the requirement that television licensees make quantitative commitments to locally-produced programming in categories other than news. This provided local stations with the flexibility to play a variety of roles in contributing to quality Canadian programming either through in-house productions, or through co-operative ventures such as co-productions and other imaginative partnership arrangements.

Secondly, through the emergence of fewer and larger ownership groups in the television industry, most English-language stations now benefit from being part of more effective buying units that serve to facilitate the production and acquisition of quality Canadian programming for broadcast on local stations.

Further, the establishment of new Commission-sanctioned and industry-sponsored programming funds to assist program producers in financing the production of Canadian programming, and the success of Canadian broadcasters and program producers in marketing Canadian programming internationally, have created new resources to offset the cost of producing or acquiring Canadian programming.

Ensuring that broadcasters continue to have access to a sufficient and reasonable degree of flexibility has been a significant consideration of the Commission in developing a policy approach to guide the operations of private, English-language television licensees over the course of the next seven years.

The Commission has reviewed each television station's performance during the current licence term and examined each licensee's proposals for the upcoming licence term. With respect to the current licence term, the Commission paid particular attention to the performance of each licensee in such areas as news and local reflection, expenditures on Canadian programming, the scheduling of under-represented categories of programming, employment equity, and their response to such public concerns as gender portrayal, violence, and the provision of service to the deaf and hard of hearing. Regarding proposals for the new licence term, the Commission has focused particularly on each licensee's proposed Canadian programming expenditures, its plans for the exhibition of Canadian entertainment, information and children's programming, and its commitments to providing service to the deaf and hard of hearing.

The conclusions reached by the Commission with respect to these and other general issues are set out below. The licensees' proposals and any other specific issues examined by the Commission with individual licensees are set out separately in the individual licence renewal decisions that accompany this notice.

II THE ROLE OF THE LOCAL BROADCASTER IN THE FUTURE BROADCASTING ENVIRONMENT

a) Local Reflection

Some licensees have responded to the challenge of the changing broadcasting environment by modifying their services with a view to securing a niche for themselves within their respective markets. While conventional local stations continue to provide general interest services, some licensees are attempting to establish unique identities by concentrating on certain categories of programming, such as local news, sports or entertainment, or by targeting a significant amount of programming at particular audiences such as young, urban adults or, in some cases, children.

The Commission recognizes that it is essential for local stations to present themselves as distinct from other services in order to remain competitive in a broadcasting environment that includes an increasing number of viewing options. Further, because of the wide availability of new Canadian specialty services that offer programming in the under-represented categories of drama, variety, documentaries and children's programming, it is no longer necessary for each conventional station to schedule programming from all of these categories. However, given that 23% of Canadian households either do not have access to cable or choose not to subscribe, the Commission considers that conventional local stations in any given market should continue to provide a diversity of programming, in particular, Canadian information and entertainment programming.

The Broadcasting Act (the Act) states that the Canadian broadcasting system should "encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity". The primary contribution by local stations to this objective, within their own communities, is the local news and information programming they produce.

For the most part, over the current licence term, stations have succeeded in producing relevant, high quality news and information programming that continues to attract large audiences. The Commission notes that many licensees have improved this service by adding newscasts on the weekend.

Generally, the Commission considers that private, local television broadcasters are making a valuable contribution to their communities through their news and information programs. The Commission commends licensees on their performance and encourages them to maintain the high standards that have come to characterize this category of programming.

With respect to the principle of local reflection in programming other than in local news, the Commission is also of the view that, overall, private local stations perform well in meeting the needs and reflecting the interests of their local audiences. The Commission notes that there was no criticism among interveners of the performance of individual stations in this regard. The Commission reiterates the importance of the principle of local reflection and reminds each television licensee that, over the new licence term, it will remain its responsibility to meet the particular needs and interests of the public residing within the geographic area it is licensed to serve. The individual decisions accompanying this notice address, in more detail, how each station has met and plans to meet this requirement for local reflection.

b) Canadian Entertainment Programming

In its 1989 renewal decisions, the Commission specified quantitative requirements for the exhibition of Canadian entertainment programming - that being programming in the under-represented categories of drama, music and variety (categories 7, 8 and 9) - in the case of only a few licensees. It emphasized, however, that "all broadcasters have a role to play, appropriate to their particular market and financial circumstances, in the development, production and broadcasting of local entertainment programming." The Commission's position has remained essentially unchanged except that it no longer requires this entertainment programming to be locally-produced.

In seeking to increase the amount of Canadian entertainment programming exhibited by private stations in the evening broadcast period (6:00 p.m. to midnight), the Commission has, to date, imposed exhibition requirements for Canadian entertainment programming on the CBC, CTV Television Network Ltd. (CTV) and Global Communications Ltd. (Global). Over the last three years, this strategy has been effective in maintaining a minimum level of approximately three to five hours per week of Canadian entertainment programming in evening broadcast periods on all CBC and CTV affiliates, and on all stations that are owned by or otherwise receive programming from Canwest Global Communications Corp. (Canwest Global). The Commission also notes that most of the private licensees whose renewal applications were heard in the fall, and who do not receive programming from CTV or Canwest Global, exhibited more than five hours per week of Canadian entertainment programming in the evening broadcast period in 1991-1992 and 1992-1993, and six hours per week or more in 1993-1994.

Nevertheless, the Commission considers that there should be even higher levels of Canadian entertainment programming in the schedules of private broadcasters. According to their program logs, for those applicants at the fall public hearings who are subject to the condition of licence on Canadian programing expenditures, Canadian entertainment programming accounted for an average of only 25% of all entertainment programming in their schedules during the evening broadcast period in 1993-1994. The Commission also notes that, historically, CTV affiliates have not scheduled Canadian entertainment programming with any consistency or in any significant quantity during the evening broadcast period beyond that provided by the CTV network.

This raises serious concerns for the Commission, particularly in light of the fact that local stations are the primary window for the exhibition of Canadian entertainment programming.

According to the fall 1993 BBM surveys, approximately half of all viewing to English-language programs is through private Canadian conventional stations, including CBC affiliates. Moreover, these stations contribute approximately 64% of the viewing to Canadian programs as a whole and 61% of the viewing to all Canadian drama programs.

The audience share of private conventional stations, while declining somewhat in the face of increased fragmentation, still remains extremely significant. The Commission considers that the highly important role played by conventional stations will not diminish substantially in the near future.

At the hearing, the Commission discussed each licensee's plans for the exhibition of Canadian entertainment programming in the evening broadcast period in the new licence term. Of particular interest to the Commission are the plans of licensees that earn over $10 million in annual advertising revenues and network payments.

Most CTV affiliates whose renewal applications were heard in the fall of 1994 propose to air Canadian entertainment programming in the evening broadcast period throughout their new licence terms, in addition to that offered by the CTV network. The additional amounts range from between 30 minutes per week to a full two hours per week.

At the fall hearings, independent stations, with one exception, proposed to schedule an average of five hours per week of Canadian entertainment programming in the evening broadcast period over the new licence term. In the case of the one exception, the licensee plans to schedule three hours per week of Canadian entertainment programming during the evening broadcast period in the first three years of a new licence term, increasing to three hours and thirty minutes in the last fours years of a seven-year licence term. The Commission notes that in all cases, the proposals by licensees of independent stations represent a decrease in Canadian entertainment programming in the evening broadcast period compared to the amount that they broadcast in 1993-1994.

The Commission discussed this with the licensees at the hearing. In general, their view was that these figures represent minimum amounts of Canadian entertainment programming in the evening broadcast period. Licensees stated that they would likely broadcast more, but wished to maintain enough flexibility to schedule different types of programming in response to the changing marketplace. Overall, stations were reluctant to make a commitment to broadcast a specific number of hours of Canadian entertainment programming in the evening broadcast period.

Notwithstanding the results of the strategy it has taken with CTV and Canwest Global and the commitments made by licensees for the new licence term, the Commission believes that private stations are capable of scheduling more high- quality Canadian entertainment programming in the evening broadcast period. In consideration of the significant role of private conventional television stations in the viewing of Canadian drama programming and Canadian programming in general, the Commission is convinced that an appropriate goal for these stations to achieve would be to increase the presence of Canadian entertainment programming so that, in the seventh year of the new licence term, it stands at a minimum of one hour each day between 6:00 p.m. and midnight, or an average of seven hours per week. Stations in the best position to make this contribution are those that earn over $10 million in annual advertising revenues and network payments. Further, the Commission considers that the production and exhibition of quality Canadian entertainment programming will be important to the success of these stations in their efforts to develop distinctive programming services in the emerging broadcasting environment.

III A FLEXIBLE POLICY APPROACH

At the time of their last licence renewal in 1989, the Commission imposed a condition of licence on each licensee earning over $10 million in annual advertising revenues and network payments, linking its Canadian program expenditures to the year-to-year growth in the station's total advertising revenues in previous years. Over the period of the licence term, the Commission released four public notices (Public Notices CRTC 1992-28, 1992-89, 1993-93 and 1993-174); two of these notices clarified for licensees the nature of expenditures that would be considered as eligible Canadian programming expenditures under this formula and two addressed provisions for greater flexibility with respect to the formula.

The effectiveness of this strategy in ensuring an appropriate level of expenditure on Canadian programs and encouraging the exhibition of quality Canadian productions came under scrutiny at the fall hearings.

The Commission notes in this regard that according to Annual Returns filed by stations in 1994, licensees of private, conventional English-language stations directed approximately 80% of their Canadian programming expenditures to the categories of news, public affairs and sports programming. The Commission has made reference previously to the high-quality of such programming and is of the view that, considering the importance of news, public affairs and sports programming to local stations, this quality would be maintained by licensees regardless of the requirement for spending.

Prior to the hearings, licensees were asked to comment on a revised condition of licence formula that would be targeted specifically to Canadian entertainment programming and children's programming, as a possible alternative to their current conditions of licence pertaining to their overall spending on Canadian programming. A precedent for a more focused approach in setting requirements for expenditures on Canadian programming was set out in the 1994 decision renewing CTV's licence (Decision CRTC 94-33).

In general, licensees at the Toronto hearing preferred the present overall spending requirement to a targeted approach. The latter was regarded as less flexible and inappropriate in its application to the local broadcaster who, it was argued, operates in very different circumstances from the CTV network.

Appearing licensees in Vancouver were more open to the idea of a targeted approach provided that, among other conditions, the spending requirements attached to such an approach did not exceed the amounts projected by licensees, in their renewal applications, for expenditures on Canadian entertainment and children's programming.

Opinions on the usefulness of an overall spending requirement were also mixed. The licensee of CFTO-TV Toronto, for instance, indicated that the overall condition of licence approach was still a valid mechanism to ensure the production and exhibition of quality Canadian programs:

We suggest that the approach that the Commission originally adopted, which [allows evaluation] at the time of licence renewal or transfer as to whether a job was well done or not well done, or whether special conditions were necessary, is a good model.

Others held different views on the flexibility provided under the current condition of licence formula. According to the CAB in its written intervention, "while the Commission has made further changes to the revenue formula it still remains in place as a distinct limitation on the flexibility broadcasters need." The CAB, however, suggested at the hearing that the current revenue formula provided more flexibility than a targeted approach.

Others, such as the licensee of CFCF-TV Montréal, however, called for more flexibility in the overall spending formula that would take into account savings in such areas as production and labour costs.

In light of these concerns, the Commission has decided to adopt an approach that will provide licensees with maximum flexibility to meet their obligations under the Act in a manner and form that takes into account their respective circumstances. Specifically, the Commission has decided to give licensees the option of determining for themselves how they will discharge their responsibilities under the Act, by either accepting a continuation of the existing condition of licence approach governing expenditures on Canadian programming, or by adhering to another condition of licence stipulating minimum quantitative requirements for the exhibition of Canadian entertainment programming in the evening broadcast period.

Therefore, licensees earning more than $10 million in annual advertising revenues and network payments in the broadcast year ending 31 August 1994 are offered the choice of either of the following two options:

Option A: Condition of Licence on Canadian Programming Expenditures.

Licensees choosing this option will be required to adhere to a condition of licence on Canadian programming expenditures which is essentially the same as the existing condition. Specifically, the Commission will allow most licensees to continue on with their existing conditions of licence; and all policies that pertain to this formula as set out in Public Notices CRTC 1989-27, 1992-28, 1992-89, 1993-93 and 1993-174 will continue to apply in the new licence term, with one important clarification.

Licensees will not be permitted to credit any overexpenditures made in the previous licence term towards Canadian programming expenditures in any year or years of the upcoming licence term.

Otherwise, and in most cases, the formula will continue to apply in a seamless fashion, so that the required amount of first-year expenditures will be calculated using, as the base amount, the minimum required level of expenditures during the final year of the current licence term under the formula (before consideration of any over- or under-expenditures from prior years), increased or decreased by the average percentage change in station advertising revenues and network payments in the last one, two, or three years of the current term, depending upon the election of the licensee.

Because of the high costs associated with the production of entertainment programming, the Commission has determined that it would be appropriate to extend the option of choosing between the two condition of licence approaches only to those licensees earning annual advertising revenues and network payments in excess of $10 million. Accordingly, licensees earning $10 million or less in annual advertising revenues and network payments, will not be given a choice between the two options; the above formula approach for Canadian programming expenditures shall continue to apply as an expectation during the new licence term.

Option B: Condition of Licence on the Exhibition of Canadian Entertainment Programming in the Evening Broadcast Period.

Licensees earning more than $10 million in annual advertising revenues and network payments who choose this condition of licence must exhibit a specific number of hours of Canadian drama, music and variety programming during the evening broadcast period in each year of the new licence term. Such programming may be either produced by the licensee or acquired from other sources. The condition will state the following:

It is a condition of licence, that the licensee broadcast in the evening broadcast period (between 6:00 p.m. and midnight) the following minimum average number of hours per week of Canadian drama, music or variety programming in each broadcast year of the licence term beginning 1 September 1995:

For the purpose of the above condition, the categories of drama, music and variety are defined as set out in Schedule I to the Television Broadcasting Regulations, 1987 (the regulations).

The Commission emphasizes that the 150% time credit, which otherwise allows licensees to claim an additional 50% of the actual duration of qualifying drama programs for the purpose of meeting the requirements for Canadian content set out in the regulations, may not be applied toward meeting condition of licence requirements for the number of clock hours of Canadian programming spe-
cified above.

Licensees are required to advise the Commission of their selection before 1 September 1995 and to adhere to their choice throughout the entire new term of licence.

In the fall of this year, the Commission intends to issue a public notice setting out, for each undertaking concerned, the option chosen by the licensee and which is thus applicable as a condition of licence.

IV. SOCIAL ISSUES

A. Service to the Deaf and Hard of Hearing.

The performance of the local, private broadcasters with respect to providing service to deaf and hard- of-hearing viewers was discussed at length during the fall hearings.

The Commission received several interventions on this issue from interest groups and consumers of closed captioning. Of particular interest to interveners were the efforts made by broadcasters to increase the amount of captioned programs in their schedules and to caption the live segments of news programming.

At the Vancouver hearing, an intervention was presented by the British Columbia Public Interest Advocacy Centre (BCPIAC) on behalf of the Canadian Disability Rights Council, the Greater Vancouver Association of the Deaf, and the British Columbia Chapter of the Canadian Hard of Hearing Association. The intervener argued that the Commission has a legal obligation under the Act to ensure that captioned programming is provided within the Canadian broadcasting system, since the resources are now available for this purpose. Further, BCPIAC claimed that to deny deaf and hard-of-hearing viewers full access to programming services is discriminatory in light of the Canadian Charter of Rights and Freedoms. The BCPIAC made an eloquent appeal citing the importance of captioned television programming:

Television has become an essential tool in the robust debate and free exchange of ideas that nourish a democratic society. When deaf and hard-of-hearing persons, most of whom are unable to hear radio broadcasts, are also unable to receive television broadcasts in a form that is comprehensible to them, they are largely cut off from this essential aspect of citizenship.

The interveners requested that the Commission require 100% closed captioning as a condition of licence for all television broadcasters or, at the very least, impose a specific schedule for the implementation of 100% closed captioning.

The Canadian Association of Captioning Consumers (CACC) also intervened in these hearings. Although generally supportive of the performance of certain licensees serving Toronto and Vancouver, the CACC was critical of the "live display" technology used by the majority of broadcasters to caption their local news.

According to the CACC:

The quality of Live Display captions is inadequate, since it only provides coverage of the pre-scripted portions of the programs, and does not allow for access of the live interviews or late breaking news stories.

The CACC also called for 100% closed captioning.

With a few exceptions, the Commission is generally satisfied that licensees have met and exceeded the requirements set out for the provision of service to the deaf and hard of hearing in the last licence renewal decisions and commends licensees on their performance in this regard. At the fall public hearings, the Commission discussed each licensee's plans to further improve television service to this audience.

While acknowledging the substantial commitments for captioning made by most licensees for the new licence term, the Commission supports the arguments of the interveners that most broadcasters now have sufficient resources to provide full programming services to the deaf and hard of hearing. The cost of captioning has decreased significantly over the last seven years and will no doubt continue to decline as more captioning suppliers enter the market. In addition, the growing trend toward corporate sponsorship of closed captioning has helped broadcasters offset the cost of captioning. Accordingly, the Commission considers that all television licensees should be able to achieve the goal of providing captioning for most of their programming by the end of the next seven years.

At the same time, the Commission acknowledges the arguments put forth by certain licensees that to require 100% captioning at all times would not be reasonable due to unforeseen circumstances, such as late delivery of captions, technical malfunctions or the lack of the availability of captions for programs acquired outside North America. The Commission also notes that captioning may not be appropriate for some types of programming such as pre-school programming or ethnic programming in languages other than English or French. In the Commission's view, a minimum of 90% captioning is a realistic target that the larger broadcasters should be required to achieve by the end of their seven-year licence terms.

As for news programming, the Commission is aware of the importance of this programming to deaf and hard-of-hearing viewers. Moreover, the Commission is sympathetic to the continued frustration experienced by deaf and hard-of-hearing viewers who have been denied access to live reports on critical news events. Having discussed with broadcasters, captioning providers, and interest groups the various costs of captioning technology, the Commission notes that real-time captioning of live programming, which is considered by deaf and hard-of-hearing viewers to be far preferable to live display captioning, is no longer cost-prohibitive and will continue to decrease in cost over the next few years. Further, new technologies that will facilitate the captioning of live programming, such as voice recognition, are now being developed and will be available in the near future. Therefore, the Commission considers that large broadcasters should be required to caption the live segments of all news programming early in the next licence term.

In developing its overall approach to closed captioning, the Commission is aware that the financial resources available to each licensee are different. As such, requirements that may be appropriate for a large station in an urban market could represent a serious financial hardship to a station in a smaller market. In light of this, the Commission has imposed less stringent expectations on licensees earning under $10 million in annual advertising revenues and network payments. The Commission's approach to captioning is set out below.

1. Large Stations (earning more than $10 million in annual advertising revenues and network payments).

The Commission requires the licensees of all stations earning more than $10 million in annual advertising revenues and network payments to caption, by 1 September 1998, all local news programming, including live segments, using either real-time captioning or another technology capable of producing high quality captioning for live programming.

The Commission also requires all such licensees to close caption at least 90% of all programming during the broadcast day, by the end of the licence term.

With regard to their adherence to these requirements, the Commission reminds licensees that, under sections 12 and 13 of the Act, such requirements may be made the subject of a mandatory order and, ultimately, an order of the Federal Court or of any superior court of a province. Such an order is enforceable in the same manner as an order of the court.

2. Medium Stations (earning between $5 million and $10 million in annual advertising revenues and network payments).

The Commission expects the licensees of all stations earning between $5 million and $10 million in annual advertising revenues and network payments to caption by the end of the licence term all local news programming, including live segments, using either real-time captioning or another technology capable of producing high quality captioning for live programming.

The Commission expects all such licensees to close caption at least 90% of all programming during the broadcast day, by the end of the licence term.

3. Small Stations (earning under $5 million in annual advertising revenues and network payments).

The Commission encourages the licensees of all stations earning less than $5 million in annual advertising revenues and network payments to caption by the end of the licence term, all local news programming, including live segments, using either real-time captioning or another technology capable of producing high quality captioning for live programming.

The Commission also encourages all such licensees to close caption at least 90% of all programming during the broadcast day by the end of the licence term.

B. Suspensive Conditions of Licence on Violence and Gender Portrayal

In Public Notice CRTC 1992-58 titled "1992 Policy on Gender Portrayal", the Commission recognized that the broadcasting industry had demonstrated increased awareness and responsibility in the area of gender portrayal over the last decade. The Commission also offered licensees the opportunity to request suspension of the condition of licence requiring adherence to the CAB's "Sex-Role Portrayal Code for Television and Radio Programming". The notice stated that:

In cases where a licensee applies and demonstrates that it has been a member in good standing of the [Canadian Broadcast Standards Council (CBSC)] for at least six months, the Commission will be prepared to suspend the application of the condition of licence as long as the licensee remains a member in good standing of the Council.

In Public Notice CRTC 1993-149, the Commission approved the CAB's "Voluntary Code Regarding Violence in Television Programming". At that time, the Commission indicated its intention to require licensees to adhere to the code, by condition of licence, at the time of licence renewal. It noted, however, that the same option of applying for a suspensive condition of licence would be extended to licensees who are members in good standing of the CBSC.

Some licensees at the fall 1994 hearings requested that both the violence and gender portrayal conditions of licence be suspended. Although others did not make a formal request for the suspension, the Commission has decided to suspend the conditions of licence on violence and gender portrayal for all of those applicants for licence renewal at the fall 1994 hearings who are members in good standing of the CBSC.

In doing so, the Commission reminds licensees that by permitting industry self-regulation with respect to violence and gender portrayal on television, it is not relinquishing its responsibility or authority in this area. According to its usual practice, the Commission will monitor closely the resolution of complaints related to violence or gender portrayal, and reminds the public that any interested party not satisfied with a CBSC decision may ask the CRTC to examine its complaint.